Ethereum Defends $2,900 Support: Liquidity Sweep and Head-and-Shoulders Pattern Shape Critical Near-Term Outlook

Ethereum's price action is putting on a clinic in market psychology. The $2,900 level isn't just a number on a chart—it's the battleground where bulls are digging in, fending off a classic liquidity sweep that threatened to flush weaker hands. Hold that line, and the path higher clears. Lose it, and the bears get a new narrative to run with.

The Technical Crossroads

All eyes are on the chart pattern unfolding. Analysts are flagging a potential head-and-shoulders formation—the kind of setup that sends technical traders scrambling for their sell orders. It's a classic risk signal, one that suggests the recent rally might be running out of steam unless buyers step up with serious conviction. The market's basically asking: Is this a healthy pullback or the start of something uglier?

Liquidity in the Crosshairs

That sweep below key support wasn't an accident. It was a calculated move to grab stop-loss orders and leverage liquidations—standard operating procedure in the crypto casino. The successful defense at $2,900 shows there's real buy-side interest waiting for a discount, but it's a fragile peace. One major sell order could tip the scales.

The Verdict: Prove It

The near-term outlook boils down to momentum. Ethereum needs to reclaim higher ground decisively, turning that $2,900 floor into a launchpad. Failure to do so invites more downside tests. Remember, in crypto, 'support' is just a level everyone agrees on until they suddenly don't—often right after some finance guru on TV calls it 'unbreakable.' The next few candles will tell the real story.

Observations from on-chain metrics, short-term chart patterns, and fund market behavior indicate that ETH is balancing between stabilization and potential downside risks, making the next confirmed MOVE crucial for traders and investors.

The ethereum price today is hovering near $3,000 after rebounding from a low of $2,780 in late November. Intraday charts on the 4-hour and daily timeframes show buyers stepping in near $2,905–$2,920, indicating active demand at this level. While short-term bullish signals have emerged, broader structural resistance and momentum indicators suggest the trend remains in a delicate equilibrium.

Ethereum Price Holds Key $2,900 Support Zone

On the 4-hour ETH/USDT chart, the $2,900–$2,920 zone has acted as a reaction point three times over the past two weeks, each time accompanied by above-average buy volume. This level also aligns with the neckline of a developing head-and-shoulders pattern, a formation that typically signals trend reversal if broken decisively.

Ethereum (ETH) is trading within a descending channel NEAR the $2,900–$2,920 key zone, showing a failed breakout on a potential head & shoulders pattern and maintaining dominant bearish momentum. Source: melikatrader94 on TradingView

Observed trading activity confirms that as long as ethereum remains above the $2,905 low, upside attempts are viable. Breaking below this support could activate the head-and-shoulders pattern, exposing ETH to the next demand zone near $2,630. Conversely, sustained defense at $2,900 could keep Ethereum consolidating in the $2,900–$3,050 range, offering traders a clear risk/reward framework.

Liquidity Sweep Signals Short-Term Buying Interest

Intraday order book analysis shows that Ethereum recently swept sell-side liquidity around $2,950, removing weaker stop-loss positions. Such liquidity sweeps often precede short-term reversals or stabilization.

Ethereum (ETH) recently swept sell-side liquidity, triggering strong demand and setting up a potential bullish continuation toward $3,327, with risk managed at $2,891. Source: EVOLUTIO on TradingView

Real-time trading data indicates that the subsequent bounce was supported by buy orders concentrated between $2,950 and $2,980, highlighting structured demand rather than sporadic momentum. The invalidation point for this setup is close below $2,891; a breach of this level WOULD suggest the sweep failed to sustain bullish pressure.

Ethereum Technical Analysis Shows Conflicting Signals

From a technical perspective, ETH remains within a descending channel on the daily chart, restricting medium-term upside. Momentum indicators, such as RSI, are trading near 42, confirming that bearish pressure persists without triggering oversold conditions.

A temporary breakout above the channel’s upper boundary briefly occurred, forming the “head” of a potential head-and-shoulders pattern. However, ETH failed to maintain gains, confirming a classic fake breakout scenario. Historically, similar failed breakouts near descending channels have led to sideways consolidation rather than immediate trend reversals.

Analysts monitoring the 4-hour chart note that reclaiming resistance above $3,280–$3,300 is necessary to validate a bullish continuation. Failure to achieve this may result in ETH testing the $2,900 support multiple times.

Institutional Sentiment Shows Signs of Stabilization

On-chain and derivatives data provide additional context. CryptoQuant’s fund market premium recently turned slightly positive after weeks of negative readings, signaling renewed institutional interest in Ethereum. This premium measures the gap between futures and spot prices, historically correlating with periods of reduced sell pressure.

Ethereum (ETH) fund positioning improves as the premium turns positive, signaling stabilizing institutional demand. Source: CryptoBusy via X

CryptoBusy reports that “fund positioning is quietly improving,” implying institutions are not exiting ETH but repositioning strategically. Combined with the undervaluation observed across ten of the twelve CryptoQuant models in early December, these signals suggest that Ethereum is finding structural support amid market volatility.

Ethereum Price Outlook: Scenario-Based Analysis

Based on current observations, Ethereum’s near-term outlook can be framed in three scenarios:

1. Bullish Scenario:

• Requirements: Daily close above $3,300, reclaiming the descending trendline resistance.

• Implication: Could open the path to $3,500–$3,650, with extended targets toward $3,878–$4,292 if momentum strengthens.

2. Bearish Scenario:

• Requirements: Close below $2,905, validating the head-and-shoulders pattern.

• Implication: Could lead to a retest of $2,630, confirming a short-term correction.

3. Neutral / Consolidation Scenario:

• Requirements: ETH remains between $2,900 and $3,050 without a decisive trend breakout.

• Implication: Sideways movement and range-bound trading, offering traders structured risk/reward opportunities while the market evaluates direction.

Looking Ahead: Ethereum at a Defining Market Juncture

Ethereum remains at a technically significant crossroads. Defense of the $2,900 support, combined with improving fund market positioning, indicates moderated downside risk. However, unresolved chart patterns, descending resistance, and prior failed breakouts continue to cap immediate bullish potential.

Ethereum was trading at around 2,922.63, down 6.37% in the last 24 hours at press time. Source: Ethereum price via Brave New Coin

Current observations suggest consolidation rather than an outright rally or crash. For traders and investors, monitoring key levels—$2,905 support and $3,300 resistance—is critical for validating the next directional move. Scenario-based analysis provides clarity, guiding market participants on potential outcomes while emphasizing risk management.